BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 15X1|
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THIRD READING
Bill No: AB 15X1
Author: Hill (D)
Amended: 6/2/11 in Senate
Vote: 27 - Urgency
SENATE GOVERNANCE & FINANCE COMMITTEE : 9-0, 6/22/11
AYES: Wolk, Huff, DeSaulnier, Fuller, Hancock, Hernandez,
Kehoe,
La Malfa, Liu
ASSEMBLY FLOOR : 73-0, 3/25/11 - See last page for vote
SUBJECT : Property tax: exclusion from newly
constructed: active solar energy system
SOURCE : Author
DIGEST : This bill revises the definition of active solar
energy systems and declares the legislative intent to
extend the current exclusion from property tax reassessment
for purchases of new active solar energy systems to active
solar energy systems that are sold in sale-leaseback
arrangements.
ANALYSIS : The California Constitution limits the maximum
amount of any ad valorem tax on real property at one
percent of full cash value, plus any locally-authorized
bonded indebtedness. Assessors reappraise property
whenever it is purchased, newly constructed, or when
ownership changes. The Constitution and statute define
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those terms.
Section Two of Article XIIIA allows the Legislature to
exclude from the definition of "new construction," the
construction or addition of any active solar energy system
(Proposition 7, 1980). Through various bills, the
Legislature enacted the exclusion from 1980-81 to 1993-94,
allowed it to sunset from 1994-95 to 1998-99, and
reinstated it in 1998 (AB 1755 �Keeley], Chapter 855,
Statutes of 1998). The Legislature has extended it twice
in the last decade, most recently until 2015-16 (AB 1451
�Leno], Chapter 538, Statutes of 2008).
The Constitution allows an exclusion from "new
construction" for solar energy systems, but not an
exclusion from "change of ownership." Under the new
construction exclusion, assessors neither reassess the
property when a taxpayer adds a solar energy system to
his/her property, nor include the value of the solar energy
system when a taxpayer buys a new home with a solar energy
system attached so long as the builder of the home didn't
claim the exemption. Additionally, the exclusion
terminates if the property is sold to a new owner. The
exclusion applies to the solar energy system regardless of
who owns it, applying equally to both homeowners who
install solar energy systems as part of their homes, or for
businesses who generate solar energy for sale to investor
owned or municipal utilities.
This bill makes legislative findings and declarations that:
1. The Legislature enacted the exclusion from new
construction for active solar energy systems to
encourage and provide incentives to develop the systems.
2. In 2008, the Legislature amended the exclusion to apply
to a taxpayer purchasing a new building with an active
solar energy system when the owner/builder did not
intend to use or occupy the building.
3. Newly constructed active solar energy systems are often
sold or transferred in sale-leaseback arrangements,
partnership flip transactions, or other transactions to
purchasers who may be eligible for federal tax benefits.
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4. The purchaser of the active solar energy system receives
the exclusion as long as the active solar energy system
is newly constructed or added and another taxpayer has
not received the exclusion.
5. That newly constructed active solar energy systems
constructed as freestanding or parking lot canopies, or
constructed as installations on existing buildings
qualify for the exclusion, including those sold in
sale-leaseback transactions.
6. The provisions of this bill do not constitute a change
in, but are instead declaratory of existing law.
This bill amends the exclusion from new construction for
active solar energy systems in the following ways:
1. Changes the definition of "active solar energy system"
to specify that the exclusion commences upon completion
of the system on part of a new property or on an
existing building.
2. States that an active solar energy exclusion that
qualifies before the current sunset date of January 1,
2018 shall also be excluded after that date.
3. Clarifies that the exclusion remains in effect only
until there is a subsequent change in ownership.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/22/11)
Board of Equalization Member Betty Yee
Board of Equalization Member George Runner
Board of Equalization Member Jerome Horton
SunEdison
SolarCity
ARGUMENTS IN SUPPORT : According to the author:
"This bill is necessary because there is uncertainty in
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Revenue and Taxation Code 73 as it relates to the current
exclusion from property tax reassessment for purchases of
new 'active solar energy systems' that are acquired using
financing mechanisms such as sale-leaseback arrangements
or partnership-flip structures. Even though these
financing mechanisms for solar energy systems have been
utilizing the property tax exclusion for years under
existing law in order to make solar more affordable for
Californians, some have argued that there might be
ambiguity in the law and it should be clarified. ABX1 15
provides this clarity and reaffirms existing law so solar
projects acquired using financing mechanisms can continue
to receive the tax assessment exclusion."
ASSEMBLY FLOOR : 73-0, 3/25/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Eng, Feuer, Fletcher, Fong, Fuentes, Furutani, Galgiani,
Garrick, Gatto, Gordon, Grove, Hagman, Halderman, Hall,
Harkey, Hayashi, Roger Hern�ndez, Hill, Huber, Hueso,
Huffman, Jeffries, Knight, Logue, Bonnie Lowenthal, Ma,
Mansoor, Mendoza, Miller, Mitchell, Monning, Morrell,
Nestande, Nielsen, Olsen, Pan, Perea, V. Manuel P�rez,
Portantino, Silva, Skinner, Smyth, Solorio, Torres,
Valadao, Wagner, Wieckowski, Williams, Yamada, John A.
P�rez
NO VOTE RECORDED: Donnelly, Gorell, Jones, Lara, Norby,
Swanson, Vacancy
AGB:kc 6/22/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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